Thursday – March 9, 2023

MBS are up .14 on the morning.

Bonds were sideways to slightly weaker overnight with markets locked in a classic Fed accommodation trade (stock prices and bond yields moving in a mirror image) during the European hours. Yields were slightly higher to start the domestic session, but fell immediately after the Jobless Claims data at 8:30am.

Jobless Claims = 211 vs 195 f’cast [190 prev]

Challenger Layoffs = 77.77k vs 102.943k prev

While this report may seem similar to the big monthly jobs report (after all, both generate an unemployment rate), they have never been in the same league when it comes to market movement potential. To be sure, that is still the case, but the difference now is that markets are clearly expressing at least some interest in the weekly Claims data in terms of volume and volatility–something we’ve only seen a handful of times, ever.

Jerome Powell wrapped up a second day of testimony yesterday, and his prepared remarks were more or less the same as what he said on Tuesday in front of the Senate. After the markets took his remarks as a signal the Fed was planning to hike by 50 basis points in March.

The Fed Funds futures see a 75% chance of a 50 basis point hike, although the 2 year yield has fallen this morning on some labor data that shows a potential softening in the data.

US employers announced 77,770 job cuts in February, according to outplacement firm Challenger, Gray and Christmas. This is down 24% from January, but multiples of last year’s number. Technology is the leader in job cuts. Challenger and Gray basically compile a list of press releases and use that to come up with their numbers. So there is a big firm bias here.

Banks came under fire after Silvergate Capital Corp. collapsed overnight amid growing scrutiny in Washington.  Cryptocurrencies slid with Bitcoin falling the most since November amid Silvergate’s meltdown.

Very decent 30yr auction.  Bonds rallying in response.  10yr down 7bps at 3.919.  MBS up 10 ticks (.31).